Under the deal, Allergan will pay $125m upfront to Heptares for exclusive global rights to a portfolio of treatments for neurological disorders.
Heptares is also eligible for milestone payments of up to $665m for the successful development and launch of the first three licensed compounds for multiple indication.
Heptares may also receive about $2.5bn if certain annual sales targets are achieved, and Allergan will commit nearly $50m to fund research and development.
The deal covers selective small molecule agonists targeting muscarinic M1 and M4 receptors in the brain, discovered using Heptares’ StaR technology platform.
Allergan will secure rights to a clinical and preclinical portfolio of M1, M4 and dual M1/M4 agonists, including HTL9936 and HTL18318, selective M1 agonists presently in phase 1 clinical development.
Allergan executive vice president and president of global brands research and development David Nicholson said: "The Heptares M1 compounds have shown promising results in early development in their ability to selectively target the M1 receptor without also activating the M2 or M3 receptors, which are associated with undesirable side effects.
"We look forward to advancing these compounds into the next stages of development, and potentially adding new approaches to helping physicians treat patients suffering from the effects of Alzheimer’s disease, an area of medicine where Allergan remains committed to continued innovation."
Allergan will develop licensed compounds after initiation of phase 2b studies and oversee manufacturing and commercialization of the products.